[T]o make the bill more palatable to China-bashing politicians, its authors have strengthened provisions that would impose tariffs on energy-intensive imports from countries that are not taking “comparable action” against climate change, meaning all developing countries. That is a recipe for a trade war, which would only compound the economic pain of global warming. Just when a deal is possible, the stage is being set for a tragedy of Wagnerian dimensions.

The term "comparable action" means any greenhouse gas regulatory programs, requirements, and other measures adopted by a foreign country that, in combination, are comparable in effect to actions carried out by the United States to limit greenhouse gas emissions pursuant to this Act, as determined by the President, taking into consideration the level of economic development of the foreign country.

The Kyoto Protocol would certainly qualify as a "greenhouse gas regulatory program[] . . . comparable in effect to" the Lieberman-Warner cap-and-trade (Kyoto was no doubt what the authors of the bill had in mind when they were defining "comparable action"). And since almost every developing country has signed the Kyoto Protocol -- including China, India, and Brazil -- they would all be deemed to have taken "comparable action" against climate change.
Moreover, the bill also contains an escape hatch of sorts: it explicitly requires "the level of economic development" to be taken into consideration in determining whether a foreign country has taken comparable action against climate change. So even if Kyoto expires and there is no successor agreement, developing countries are unlikely to be hit with import tariffs.
I agree that the "comparable action" provision was added to pacify China-bashers (and, no doubt, some hard-core environmentalists too). Pacifying opponents of a bill by using a tough-sounding phrase and then defining away its effect is a common trick in the legislative process. It appears The Economist was fooled as well.

About Me

I'm a finance lawyer in New York. I used to focus on derivatives and structured finance (you know, back when there was a structured finance market). I spent the majority of my career at one of the major investment banks. My background is in economics and, unfortunately, politics.

Subscribe - RSS

Subscribe via email

Disclaimer

This site is intended for educational purposes only. The content on this site DOES NOT constitute, nor should it be construed as, specific legal advice. The opinions expressed on this site are the author's personal views, and may not represent the opinions of the author's employer(s), past or present. Your use of this site does not form the basis for an attorney-client relationship. Sending the author an email does not create an attorney-client relationship.

You should seek professional legal counsel authorized to practice law in your jurisdiction before acting on any information contained on this site. I expressly disclaim any and all liability of any kind or nature with respect to any act or omission based wholly or in part in reliance on anything contained on this site.